Although bankruptcy may not be fun, we make it easy. The most difficult step in filing for chapter 7 bankruptcy is making the decision to contact an Attorney. Many of our clients did not realize that they could keep their personal belongings and in most cases their home and vehicle. A chapter 7 bankruptcy discharges the Debtor’s personal liability for most unsecured debts and gives the Debtor an opportunity to surrender secured property that is under water.
The means test determines whether a Debtor will qualify for a chapter 7 bankruptcy. The test consists of a formula accounting the Debtor’s 6 month average income and the Debtor’s ongoing qualified expenses. Debtors who make more than the median income for their household size can still qualify for a chapter 7 case if they have enough qualified deductions to offset their income. The current median incomes for California are as follows:
• 1 person = $47,969
• 2 person = $64,647
• 3 person = $70,638
• 4 person = $79,194
• 5 person = $86,094
• 6 person = $92,994
• 7 person = $99,894
• 8 person = $106,794
Qualified deductions include mortgage payments, car payments, taxes, spousal support, child care, charitable contributions, health insurance and union dues. A Debtor cannot deduct expenses that are associated with secured property that is being surrendered.
A chapter 7 is considered the easiest bankruptcy chapter as the case timeline is approximately 90 days from the date of filing.